When a CEO who runs a $76.5 billion dollar company, $4 billion of which he throws into marketing, talks about the need to change the marketing model, agencies listen. Or tremble, I suppose.
But Lafley used the word "we." I assume he means both marketers and agencies, as they have a mutual responsibility to solve the problem.
Lafley's bon mot dates back to 2004, but it echoes almost chapter and verse what we hear at every major industry conference -- USOC-sanctioned, synchronized hand wringing about the need to regain the strategic mandate and integrate disciplines. And somebody please do something about those shrinking profit margins.
We know the root of the problem is the cost-based compensation model, thanks to comp-ikaze (VeraSage Institute Founder) Ron Baker. Following the lucre has spurred bad practices and a deteriorating relationship because it focuses on the wrong things: "efforts, activities and costs. It does this at the expense of the right things -- outputs, results and values. It misaligns the economic incentives on each side. The client pays whether the agency adds value or not, and the agency is paid a fixed amount regardless of the value it creates."
It's like the alarm clock that, after tormenting you from your slumber, rolls off the night stand to taunt you from under the bed. We heard you, damn it! The agency model is broken. And still the damn thing keeps chirping away.
But you snooze, you lose.
Marketers have declared that the agency model is broken. We, the agency, agree. So let's collect the broken pieces and put the problem in the middle of a proverbial sandbox, a place where we can all come together to solve it -- even if we have to get a little dirty in the process.
From here emerges connection planning (sometimes referred to as engagement or communications planning), which brings together marketing, creative and account planning to collectively confront the shortcomings of the traditional advertising-agency model -- playing nice in the sandbox.
"Your clients are in trouble. They are looking to you to save them. The ad inventory that has been sold for the last 50 years no longer works, and marketers have started to figure that out. In the process, your clients will fire, hire, fire and hire agency after agency ... seeking someone -- anyone -- who can help them perhaps on where to go next." -- John Stratton, CMO, Verizon Wireless (2006)
For marketers and agencies, it's time to get mutual. That's what marketers want from agencies. The No. 1 agency value driver, according to an Advertising Age survey: "Working in a collaborative way (with the client) by creating an environment of mutual respect." Mutual, huh? That'd mean together, give and take, two-way, right? McKinsey & Co. recently defined the realities of the modern CMO. The conclusion was that to be effective, CMOs must be involved in business strategy. They must lead companywide change in response to evolving buying patterns, shape the company's public profile, have an impact on research and product development, and build new marketing capabilities throughout the company. "Strategic activist," McKinsey called it.
Bingo: Business strategy is marketing strategy. The smart companies get it. The brave ones are doing something about it.
This is a strategic reality that is leading to the reinvention of advertising agencies -- a new breed of communications companies building their practices around ideas that drive business opportunities.
Connection planning is an evolution concurrent with the rise of multiple media channels. Digitally enabled consumers are entering the purchasing decision in entirely new ways, seizing control of "brand dynamics." It is also a recognition of a need to facilitate much more effective and accountable collaboration between clients and agencies to develop meaningful business solutions.
Essentially, connection planning is the front-end collaboration among the marketing strategists, creative practitioners and media planners on brand strategy and marketing. This focuses the discussion on what is best for the brand instead of giving a "cut" to various silos inside the traditional advertising agency: print, TV, digital. Even "nontraditional" has become a standard part of the mix at many ad agencies.
This type of open and continuous partnership also allows us -- marketers and agencies -- to consider more deeply how the consumer interacts with brands, taking into account even more consumer touch points and emerging technologies and trends than we might have otherwise.
'Let agencies in'
It's fair to say there is room for agencies to change the way they work and elevate the quality of their output, offering a realistic expectation of changing the downward trajectory of their revenue model and recapturing a bit of the "strategic mandate." It's equally fair to say their clients have not made it easy for them to change.
Clients have to let agencies in. And agencies have to earn it. We both have to start making marketing decisions much deeper within the organization. That means working together in an entirely different way.
Next, we need to have a conversation about intellectual property, revenue share, performance-related fees and, gulp, equity. Yes, that is hard to do. Yes, that is what must be done. I mean, assuming you want to end the moaning and do it right. Everybody says they want to. Do you have the guts? Well, do you?
Job is to connect
So grab an oar. We're in the same boat together. Synchronized rowing comes from realizing that the job is no longer to "advertise." The job of a professional communicator, your marketing agency, is to connect. It requires a renewed sense of responsibility to the people, communities and environment we affect. The talent exists, but the method by which that talent is brought together and the commitment necessary to achieve something that drives the development of your business (and ours) is, in most cases, lacking.
This disconnect is perhaps a result of fear. When we kill the fear, we'll make room for innovation and optimism. To bludgeon Josef Schumpeter's famous economic principle, "creative destruction," to get something new, you have to lose something old. I vote it be fear.
If we are willing to sprinkle in a little leadership, we can join with agencies and marketers embracing connection planning -- such as Anomaly, Naked, Johnson & Johnson, Method and Apple -- who have no problem calling bullshit on the naked emperor. We can then get back the fun part: problem solving.
Recently I was talking to a couple of agency people, including Mike Byrne, partner-creative chief at Anomaly, about goals. One guy said he wanted a shortlist of great clients. Amen. But Mike threw paper to his rock and said, "I don't want any clients, just business partners." Damn. Isn't that the right idea? Commit to the possibility. He's talking about sharing risk and reward -- bringing cultural insights, communications processes and products together with another's entrepreneurial vision, manufacturing expertise, distribution might or R&D skills to develop a business idea. Help it build momentum and attain cultural influence.
Whether contractually speaking, we're swapping that much spit is not really the point (but a hell of good conversation to put on the table). But this way of approaching the work is. And the only way to meaningfully approach that work is to reinvent not just the agency but the client-agency relationship. Together.
Robbie Vitrano is president-co-founder of Trumpet. Clients include FreshDirect and New Orleans Convention and Visitors Bureau. The agency recently hosted the first annual Connection Planning Conference in New Orleans.